Indonesia's trade surplus narrows to US$477m in June

Jakarta

INDONESIA'S trade surplus narrowed to US$477 million in June, with weak imports and exports underscoring concerns over weakening growth in South-east Asia's largest economy.

Faster falls in imports than exports have resulted in Indonesia posting monthly trade surpluses since December 2014. In June, imports tumbled 17.42 per cent, but at a slower pace than expected in a Reuters poll. In dollar terms, June imports were the biggest this year.

Imports were bolstered by buying before and during the Muslim fasting month of Ramadan, which started in mid-June this year. But year-on-year comparisons were difficult to assess as Ramadan began near the end of June last year.

June exports were down 12.78 per cent from a year ago, largely reflecting a near-50 per cent drop in oil and gas shipments as prices slumped globally. "Although imports rose month-on-month, overall it's still a contraction from a year ago and it suggests economic slowdown,"said Rangga Cipta, an analyst with Samuel Sekuritas in Jakarta.

Indonesia's annual economic growth was 4.7 per cent in the first quarter, the weakest since 2009.

The statistics bureau will announce the second quarter growth early August.

Vaninder Singh of Royal Bank of Scotland in Singapore said that the data "confirmed a disturbing trend has emerged", pointing to continuing weak imports of capital goods.

"This is a worrying sign for President Jokowi's plan to boost manufacturing in the country and shift away from the commodities dependant model in play over the last decade and a half."

The trade surplus for the June quarter was US$4.35 billion, nearly double the surplus notched in the first quarter surplus, and in the second quarter of 2014.

Bank Indonesia on Tuesday said that the 2015 second quarter current account gap is expected at 2.5 per cent of GDP. The central bank will announce balance of payments data in mid-August.

The rupiah has been broadly stable around 13,300 per dollar since June, as concerns over Indonesia's external balances receded. Bank Indonesia governor Agus Martowardojo on Monday said that the rupiah at that level is slightly undervalued, but it was good for export competitiveness. REUTERS